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USDA-Rural Development- ELECTRIC PROGRAM. Biomass Conference Georgia Center for Continuing Education, Athens, GA Rob Langston, Atlanta, GA Phone/FAX 404-250-9889 Robert.Langston@usda.gov August 30, 2005. What is USDA-RD-RUS? .

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usda rural development electric program
USDA-Rural Development-ELECTRIC PROGRAM
  • Biomass Conference
        • Georgia Center for Continuing Education, Athens, GA
        • Rob Langston, Atlanta, GA Phone/FAX 404-250-9889
        • Robert.Langston@usda.gov
        • August 30, 2005
what is usda rd rus
What is USDA-RD-RUS?
  • R.U.S. is the successor to the Rural Electrification Administration (REA) that helped electrify rural America following the Depression years.
  • Mission: Increase economic opportunity and improve the quality of life for rural residents
  • Authority through the R.E. Act of 1936
historical rus activity
Historical RUS Activity
  • To provide financing for rural electric generation, transmission and distribution cooperatives
  • Oversight of borrowers
  • Engineering and O&M support
misconception
Misconception
  • That RUS can only provide financing for rural electric cooperatives
  • R.E. Act requires beneficiaries of financing to be “persons in rural areas”
  • This requirement can be more-broadly interpreted, under 7 CFR 1710.101 to include providing of financing non-coop entities, as long as the ‘beneficiaries’ are ‘rural’
other eligible entities
Other Eligible Entities
  • Corporations
  • States, territories, & subdivisions/agencies
  • Municipalities, peoples utility districts
  • Cooperative, non-profit, and limited-dividend, or mutual associations
  • The only prohibition (of the RE Act) is that loans cannot be made to individual consumers
reasons for usda s decision to support renewable energy
Reasons For USDA’s Decision To Support Renewable Energy
  • Part of President Bush’s National Energy Policy (NEP); a plan to increase the utilization of renewable energy and improve energy efficiency
  • Declining word petroleum reserves
  • Clean air and environmental issues
how can rus support biomass and renewables
How Can RUS Support “Biomass” and “Renewables”?
  • RUS can provide financing and grants to eligible recipients
how much funding is available
How Much Funding is Available?
  • $200 million in electric loan funds is available in FY 2005-2006
  • Funds are reserved for renewable energy projects
  • Loan applications are processed on a priority basis (meaning a relatively-prompt loan review process)
rus loan programs

RUS Loan Programs

Loan Options:

Direct loans –

of RUS-appropriated funds, or

RUS Guaranteed loans –

of federal “FFB” money, or of private money with CFC or CoBank

interest rates
Interest Rates
  • Interest rates are similar but not identical for direct vs FFB-guaranteed loans, so timing may become the deciding factor.
  • The applicable interest rate is the published rate at time of each draw of funds
example rates and terms
Example Rates and Terms
  • Presently approx. 1.7% for 1-year fixed
  • Presently approx. 3.6% for 7-year fixed
  • Presently approx. 5% for 30-year fixed
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  • Terms of 1, 2, 3, 5, 7, 10, 20, and 30 years
  • Maximum term not-to-exceed ‘useful life’
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  • http://www.usda.gov/rus/electric/rates.shtml
all loans are reimbursement
All Loans are “Reimbursement”
  • Details are in 7 CFR 1710
  • “Reimbursement” means that RUS loan funds are not available to the borrower ‘up front’ to complete the construction
  • Construction expenditures are ‘reimbursed’ to the borrower either at the end of the project, or as ‘progress payments’ if part of a construction contract
example projects financed
Example Projects Financed
  • To date, RUS has financed numerous photovoltaic and wind powered renewable systems nationwide, generally through existing local cooperatives

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  • Recently-announced was a $20 million RUS loan to a privately-owned power company in GA
  • Project will use plasma arc technology to convert used auto tires into energy and saleable byproducts
slide14

Renewable Loans – To Date

Renewable Loans – To Date

Renewable Loans – To Date

advantages of rus funding
Advantages of RUS funding
  • Interest rates are at the ‘government’s cost of money’, typically lower than from other market sources (especially for ‘non-conventional’ projects, unproven technologies, or new entities)
advantages cont
Advantages (cont.)
  • RUS may constitute a single agency for multiple oversight and reporting areas (i.e., environmental, rate regulatory, financial, etc.)
rus requirements
RUS Requirements
  • Must demonstrate project:
    • Eligibility for RUS financing (i.e., must provide electricity to “rural area”)
    • Feasibility to ensure loan repayment
    • Adequate loan security
environmental requirements
Environmental Requirements
  • Must comply with all environmental laws, including federal, state and local laws
  • Federal requirements may be more stringent
  • RUS environmental review must be completed before site preparation or construction begins
  • (reference 7 CFR Part 1794)
business plan requirements
Business Plan Requirements
  • 1. Specifics of intended project
  • 2. Org. chart with names/titles of principals
  • 3. Corp. governance and accounting
  • 4. Construction & long-term financing plans
  • 5. Fuel supply plans
  • 6. Construction work plan (engineering)
  • 7. Feasibility studies
  • 8. O&M plans
  • 9. Determination of ‘useful life’
business plan req mts cont
Business Plan Req’mts (cont.)
  • 10. Environmental studies
  • 11. Interconnection agreements
  • 12. Purchase power agreements
  • 13. Contract inventory & status (accounting)
  • 14. Customer electricity market assessments
  • 15. By-product market assessments
  • 16. Future expansion plans
  • 17. Any other useful info.
business plan req mts cont21
Business Plan Req’mts (cont.)
  • Information submitted should be sufficiently detailed and comprehensive, commensurate with the credit risk associated with the amount financed
  • Should include credit experience of the borrower
certifications and other requirements
Certifications and Other Requirements
  • Competetive bidding
  • Equal opportunity and non-discrimination
  • Debarment and suspension
  • Restrictions on lobbying
  • Federal debt delinquency
  • Drug-free workplace
rus security
RUS’ Security
  • Non-RUS equity requirement of 20+% of total project financing
  • RUS holds a first mortgage on the facilities owned by the applicant
  • RUS requires annual audit and financial reporting
internet

Internet

RUS Web Site

internet25
Internet

WEB SITE LOCATION

http://www.usda.gov/rus/electric/

electric program sub pages
“Electric Program” Sub-Pages
  • FAQ’s
  • Staff Directory (incl. GFR’s by state)
  • Loan Programs
  • Interest Rates
  • Federal Register
  • Renewable Energy
  • Forms
  • Borrower Directory
  • Links
also visit the usda rural development website
Also Visit the “USDA-Rural Development” Website

http://www.rurdev.usda.gov/

  • For news about renewables and energy efficiency, as well as other loans and grants
rus encourages you to visit us on the world wide web

RUS Encourages You to Visit Us on the WORLD WIDE WEB

http://www.usda.gov/rus/electric

http://www.rurdev.usda.gov/

your first steps
Your First Steps
  • Determine if you might have an interest in RUS financing for a renewable energy project
  • Research the available web-based references
  • Contact the RUS “General Field Rep.” for your state, who will assist you further
georgia rus contact
GEORGIA RUS Contact
  • Rob Langston, GFR
  • USDA-Rural Utilities Service
  • 40 Chastain Cove NE
  • Atlanta, GA 30342
  • Phone/Fax 404-250-9889
  • Email Robert.Langston@usda.gov